Covid-19 and International Law

An obvious starting point for enquiry is the law of the World Health Organization, a “Specialized Agency” of the United Nations of which virtually all sovereign states are members.  The WHO is the source of the International Health Regulations (3rd edition, 2005), one of whose key obligations is for states to notify the Organization, and hence the other member states, within 24 hours, of “all events which may constitute a public health emergency of international concern within [their] territory”.  The medical information required is very detailed.  These Regulations are legally binding on all the members of the WHO. 

However, the mechanism for settling disputes concerning the implementation of the Regulations is distinctly weak (Article 56).  If the states parties concerned cannot settle their dispute by means of negotiation, mediation, conciliation or the like, then they can agree to refer the question to the Director-General of the WHO, but both parties have to consent to this.  Arbitration is also available, but again only if both parties have agreed to it, either generally or in relation to a specific dispute, in advance or ad hoc.  States are in general very reluctant to commit to inter-state arbitration, and so this is a provision with few, if any, teeth. 

Several states, and notably China, have been accused of facilitating the spread of the Covid pandemic by failing to give full and timely notification of the outbreak in their territory.  There are likely to be considerable problems in proving the facts and in establishing causation.  But in any case, as we have just seen, the enforcement mechanism is very defective.  Furthermore, whilst the constitutions of some international organisations provide for the suspension or expulsion of members who commit serious violations of their principles and purposes, Article 7 of the WHO constitution provides merely that “If a Member fails to meet its financial obligations to the Organization or in other exceptional circumstances, the Health Assembly may, on such conditions as it thinks proper, suspend the voting privileges and services to which a Member is entitled.”  The Organization’s record suggests that, even if responsibility for the spread of the pandemic could be objectively established, the WHO is still unlikely even to suspend the offending member or members.

Although the legal remedies under the IHR and the WHO Constitution are extremely weak, that is not necessarily to say that a state damaged by the action or inaction of another state or state has no recourse.  Some remedies exist under customary international law.[1] There is some judicial and arbitral authority for the proposition that if a state commits or permits conduct on its territory which causes foreseeable harm to a neighbour(s), that constitutes a breach of international law.[2] Indeed, in the Corfu Channel case in 1949, where Albania was found to have failed to warn a British naval fleet of the presence of mines in its waters about which it knew or should have known, it was held liable to the UK for the loss of life and damage caused by that omission.[3] Although, as I have already indicated, they could be difficulty in proving exactly what was done or omitted within a state’s territory, and also in proving causation etc., the IHR could prove a useful guide as to what would have been appropriate conduct.

But even if international law contains substantive rules which could form the basis of liability, the problem is to find a legal forum.  The International Court of Justice, for example, only has jurisdiction over states who have agreed, either in advance or ad hoc, to cases being brought against them.  Most states, including e.g. China, have refused to agree to this jurisdiction; and even the minority who have consented have often qualified their consent with considerable reservations.

Still, even in the absence of a forum in which to pursue their claims, aggrieved states may not be entirely without remedies.  If they feel sufficiently sure of the facts and that a breach of international law has been committed, they are entitled to pursue countermeasures, such as imposing trade restrictions on the offender or seizing assets belonging to it in their own territory.  There are two conditions to the exercise of this right: the measures must be non-forcible and proportionate.

Turning from the question whether particular action or inaction caused or aggravated the pandemic, several other international law issues suggest themselves. 

First, there is the question of liability under international investment law.  Currently, there exist some 3000 bilateral treaties and free trade agreements providing for the promotion and protection of foreign investments (“IPPAs”), as well as several multilateral ones.  Although their precise terms vary, typically these treaties provide for – in particular – fair and equitable treatment of investors and investments; non-discrimination between nationals and foreign investors or between different groups of foreign investors; and abstention from expropriation (including indirect expropriation) except in accordance with law, for public policy purposes, in a non-discriminatory manner, and against the payment of prompt, effective, and adequate compensation, the latter usually being expressed in terms of a fair market value.  Many treaties also contain a “performance of obligations” or “umbrella” clause, which require the host state to comply with obligations undertaken in their own legislation and, in some instances, to comply with their contractual undertakings.  Often they also contained “most-favoured-nation” clauses, which may entitle the claimant to rely on more favourable provisions in other treaties – though much depends on the wording, and the case law is not completely consistent. 

IPPAs typically include parties’ consent in advance to being brought before international arbitration tribunals, normally constituted ad hoc.  Many of these tribunals operate under the aegis of the International Centre for the Settlement of Investment Disputes between States and Investors of other States (“ICSID”) – an offshoot of the World Bank – but other arrangements also exist.  Having once given its consent to arbitration in advance, a state cannot successfully pull out when proceedings are actually brought.  The tribunal can be constituted even without its consent; and its refusal to participate in the proceedings will not prevent an award being rendered if the claim can be substantiated in terms of jurisdiction, the merits and quantum.  All of the states parties to the ICSID Convention (most of the states in the world) have also agreed that an award of an ICSID tribunal can be recognised and enforced as if it were a judgment of their own courts – subject to any applicable rules of state immunity; and for non-ICSID awards a comparable system exists under the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. 

Although the details will emerge only in due course, it already seems clear that several states – and perhaps most of them – have responded to the Covid crisis by taking measures which potentially violate these obligations.  For instance, they may have interfered with enterprises in a way that was arbitrary or disproportionate.  They may have discriminated in the provision of emergency financial assistance between their own nationals and “resident” foreign investors.  They may have directly expropriated foreign businesses or their assets in order to divert them to exclusively public use, or indirectly expropriated such businesses by forcing them to close for the duration of the crisis or to direct their activities to other unprofitable ends - and all without the payment of adequate, prompt or effective compensation.  Or a government might simply walk away from a contract it had entered into with a foreign investor, purely because performing it has become more expensive.  These are just a handful of the many types of scenario that might emerge or have already done so.  Multi-million, and even billion, dollar claims are not unusual under IPPAs, so governments cannot take these risks lightly, even though statistics show that respondents are likely to be successful in over half of the cases brought.

Claimants under this system will have a number of hurdles to overcome, apart from establishing the facts.  They will have to show that the instrument in question gives the tribunal jurisdiction, which can raise complicated questions about its temporal scope, its personal coverage (was the claimant a national of the relevant state party to the treaty, and what about dual nationals etc.?);  did the asset in question count as an “investment”; and so forth.  If that hurdle is overcome, the claimant will have to prove that the conduct complained of violated one or more of the “host” state’s obligations under the treaty and caused the damage complained of.  Quantification of compensation or damages is a complex question even at the best of times, and frequently involves a calculation of what an asset would have been worth “but for” the breach.  To predict what would have happened in that counterfactual situation is difficult enough even in a world where expectations are relatively stable; but expectations are far from stable now, because of the severe impact, including the economic impact, of Covid-19; and so quantification is likely to become even more contentious. 

Respondent governments will be sure to raise all possible defences.  First, some treaties, particularly some of the more modern ones, contain exceptions to their protection in the case of measures taken for the protection of public health, public safety, and protection of the environment, etc.  Usually, it will be necessary to demonstrate proportionality and a reasonable relation between the objective and the measures complained of; but governments are given a margin of appreciation, which is likely to be all the wider in the case of a pandemic of a particularly grave kind, where the medical facts were and remain far from completely clear.  Secondly, government contracts covered by umbrella clauses often contain force majeure exceptions.  Their meaning and applicability to the facts can leave much room for debate.  Relying on Article 31 (3) (c) of the Vienna Convention on the Law of Treaties 1969, governments can also invoke customary international law defences in the interpretation and application of their investment treaties, and customary international law recognises force majeure as potentially providing such a defence.[4] The situation must not be self-inflicted, however, and the state must not have assumed the risk of the particular situation arising.
 
Customary international law also recognises a defence of necessity.  However, once again, the state must not have contributed to the situation of necessity; and in a number of investment tribunals awards, Argentina was held to have contributed to its own economic crisis and so could not rely on the defence.[5] Other important conditions for the successful invocation of the defence are that the measure complained of (a) was the only means for the state to safeguard an essential interest against a grave and imminent peril; and (b) did not seriously impair an essential interest of the other state, other states or the international community generally.  These are high hurdles, but in the present crisis they are likely to be surmounted in some cases.

Passing from investments to trade, various measures taken by states are likely to give rise to international law disputes.  The leading treaty in this area is the General Agreement on Tariffs and Trade 1947,[6] but other somewhat similar treaties have also been concluded under the auspices of the World Trade Organisation, notably the General Agreement on Trade in Services.  Various measures taken by states, purportedly to protect themselves in the context of the current pandemic or its economic consequences, can potentially violate these agreements.  Examples which readily come to mind are discriminatory bans on the export of medical equipment and the imposition of tariffs on imports for the purpose of protecting domestic industries.  The details are complex and beyond the scope of the present outline.  However, it should be noted that there are some possible defences which states are likely to invoke.  One is that the measures “were necessary to protect human, animal or plant life or health” (Article XX (b)).  Article XXI also exempts from the scope of the treaty action taken by a state which it considers necessary for the protection of its “essential security interests”; but the further wording “(iii) taken in time of war or other emergency in international relations” is arguably not very apt to cover a pandemic or economic crisis caused by it.

Disputes under these instruments are dealt with under the WHO dispute settlement mechanism.  This is purely inter-state.  In the first instance, disputes are dealt with by specially constituted panels.  Appeals were previously dealt with by standing, high level Appellate Body; but in recent times the USA has blocked the appointment of replacement judges, and so the Appellate Body is not quorate and unable to function.  However, moves are afoot on the part of the EU and a number of other like-minded states to set up an equivalent arbitral system to take the place of the Appellate Body, at least until the current crisis is resolved.

Yet another set of international law issues will no doubt arise under various treaties for the international protection of human rights.  Some of these are regional, such as the European Convention on Human Rights, whilst others are quasi-universal, such as the International Covenant on Civil and Political Rights.  Everyone within the jurisdiction of a contracting state has a right of recourse, irrespective of nationality.  In the first instance, claims under these treaties may be actionable in domestic courts, such as the ECHR in UK courts.  Domestic law remedies prove insufficient, there may be recourse to an international human rights court, such as the European Court of Human Rights (not to be confused with the European Court of Justice), or to a somewhat similar body, such as the UN Human Rights Committee.[7]  Restrictions on freedom of movement because of the pandemic is one obvious area where litigation can be anticipated; but there will doubtless be many others.  Governments have a number of defences with which they might be able to counter such claims, including the need to protect the rights and freedoms of others, and their margin of appreciation.  Nevertheless, these measures have to be proportionate and non-discriminatory, and no doubt there will be ample room for debate on the facts.  Generally speaking, protection of economic interests tends to be significantly weaker under these treaties than that afforded to more traditional civil and political rights, such as freedom from arbitrary detention and freedom of speech; but the First Protocol of the ECHR is something of an exception, in that it enshrines various aspects of the right to property, and the Convention also, unusually, gives legal standing to juridical persons such as corporations, and not just to individuals.

This has just been a broad outline of some of the types of international law dispute that can and will arise in the wake of actions taken by states responding to harm to human health and the economy caused by the current pandemic, as well as possible future ones.  As well as these “known knowns” and “known unknowns”, there will almost certainly be “unknown unknowns”.

References

[1] Broadly, this is the body of rules emerging from the consistent conduct of states as a whole, in a legal context.
[2] See e.g. the Trail Smelter arbitration (1941) , III  Reports of International Arbitration Awards 1905; Gabčikovo-Nagymaros Project (HungarylSlovakia), Judgment, International Court of Justice Reports 1997, p. 7.
[3] ICJ Reports 1949, p. 4.
[4] The UN International Law Commission has attempted to codify (inter-alia) general defences available under customary international law in its 2001 Articles on Responsibility of States for Internationally Wrongful Acts.
[5] Other tribunals, however, took a different view.
[6] European Community Law is outside the scope of the present note.
[7] The main function of the Committee is to report generally on the human rights situation in the various states parties; but there are also mechanisms for interstate and individual complaints.